Low Deposit Fee

The Low Deposit Fee (LDF) is a one-off amount payable by your customer, in connection with the low deposit being paid by your client and/or the low amount of equity your client has in their security property. The LDF contributes to us (the lender) recovering some of the potential losses that we (the lender) may encounter if your client is unable to repay their loan.

Low Deposit Fee is required if the LVR is greater than 80%. This means your client may be able to apply for a home loan where your client has less than a 20% deposit and consider home ownership sooner.

The cost of Low Deposit Fee varies and is primarily based upon your loan amount and the LVR. A higher LVR will result in a higher Low Deposit Fee amount being payable.

To calculate the Low Deposit Fee, download the LDF Calculator. All green coloured fields in the calculator must be completed. Refer to the Guide tab for help with completing the fields.

Low Deposit Fee is an amount deducted from the available loan funds and collected at loan settlement. There is an option to capitalise this amount to your home loan, however, it’s important to understand that capitalising LDF into the loan amount will increase the size of the loan, increasing repayments and the interest paid for the duration of the loan term. 
 

Low Deposit Fee example

 If your client were looking to purchase a property for $700,000, they would generally need a 20% deposit ($140,000). By utilising LDF, we may provide finance of up to 95% of the property value if your client doesn’t have the 20% deposit but otherwise meets lending requirements. This means your client would be able to purchase this property with a 5% deposit ($35,000), and loan $665,000 from us allowing them to secure a home sooner.

The low deposit fee (LDF) is initially calculated based on the amount at original settlement for vacant land. This is applicable for loans with an LVR >80%, where a once off amount is payable by the borrower.

Where your client is at the point of construction, an internal refinance on the land is required and an increase is to be submitted for the construction portion of the loan.

Should the loan remain with an LVR >80%:

1. We will calculate the total LDF payable based on the total LVR and loan amount.
2. We will then deduct the original LDF already paid from the new LDF payable.

Please note: Where your client is at the point of construction and the internal refinanced loan has an LVR less than or equal to 80%, we will not be able to refund the original LDF paid on the vacant land. 

If your client is unable to repay their loan and/or a default event occurs, and we (the lender) sustain a loss after the property is sold, then the Low Deposit Fee contributes to us (the lender) recovering some of the loss. We may seek to recover any loss or shortfall from your client and/or their guarantors.

It is important not to confuse Low Deposit Fee with any Mortgage Protection Insurance. If your client defaults on their loan, Low Deposit Fee doesn’t provide your client, the borrower, with any protection even though they pay for it – it protects us, the lender.